RE: Correction Of The Bubble And Other Ideas
I like to pay attention to what's important. and speculating with distressed buyers is not quite the same in CA as in Las Vegas or Florida.
i think a real corretion will happen when the baby boomers start selling their homes and moving into adult communities. the baby boomers have most of the bigger homes so will the younger people have the money to buy them. they seem to be building alot of those communities around the country on gated golf courses. the homes are around 400k or higher which is high for 2 bedroom ranches but less then the homes they have now.
It feels like a buying frenzy b/c of the lack of housing inventory but more people are moving to LA every day and land is getting scarce. I cant seem to pull the trigger on buying property but I would hate to rent forever. Even if it is a block from the ocean. I remember the early 90's when real estate plummeted. I personally know alot of people who forclosed or walked away from their properties.
[ Edited by gambler56 on Date 05/22/2004 ]
The Baby Boomers will not be the correction. I have been through the 1980 – 1983, 1991 – 1993 and the start of the new cycle 2003 – 2005.
1978 – 1980
VA/FHA no money down purchases
Negative mortgages.
Interest rates 9% to 14% (increased)
Housing Affordability 36% – 17% (dropped)
1988 – 1990
Apreciation
Interest Rates 10% – 9% (dropped)
Housing Affordability 24% – 17% Dropped)
2003 -– 2004 (May)
Apreciation
100% financing on Purchase of Reral Estate
Interest Rates 5.7% – 5.8%
Housing Affordability – 23% 12/31/03 –Orange County 14% 5/04)
The Baby Boomers (and their heirs) will increase the surplus of homes available to purchase. They will down size and liquidate their investments. Their heirs will sell Real Estate for the quick cash or to pay inheritance tax.
What ever happens to the Real Estate Market will also happen to the Stock Market. The next generation can not buy all that we have (I am a early Baby Boomer).
My two cents,
Taiyo